Contributed Commentaries

Gold's Death Spiral

Featuring views and opinions written by market professionals, not staff journalists.

Commentaries & Views

Share this article:

Tuesday saw gold make a nice rebound from yet another down day and close higher on the day. Today with the FOMC announcing a decision on interest rates, gold has found its way lower once again.

Between today and Friday, there are two big news items that can change the course of the gold death spiral -- today’s FOMC meeting and Friday’s jobs report. The numbers by themselves are meaningless. The key is what the market is expecting.

Traders and investors have a bad habit of trying to trade the news, not realizing the news is priced in and they should be trading on the reaction. Remember, in today’s world, news moves at the speed of sound and the big banks pay millions to get that news first. By the time we see the news, it’s old.

Gold will move on the news from the FOMC today and again from the jobs number on Friday. The question is which way. The news itself is worthless but the reaction is priceless. If gold pops higher on the news, that would indicate more downside action remains; a sell-off to $1,180 could signal a bottom. Be ready to react to the news, not predict it.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.